- Microsoft opened higher Tuesday amid volatility as traders await its Wednesday earnings report, with estimates of $3.66 per share on $75.38 billion revenue.
- AI growth via Azure and OpenAI ties remains a key driver, with resistance near $560 and support around $500–$520.
Microsoft gapped higher to kick off the trading session on Tuesday as we continue to see a lot of noisy and volatile trading. That being said, this is a market waiting to see what the earnings report brings after the bell on Wednesday, with estimates calling for $3.66 per share in earnings and $75.38 billion in revenue. Analysts expect the Azure side of the business to be extraordinarily lucrative, and Microsoft continues to be one of the mainstays of passive investing, which in itself gives it a consistent bid as it is the ”Flavor of the day.”
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Analysts from Bank of America predict that Microsoft will increase its spending targets to $125 billion for the fiscal year to address capacity issues Azure has faced, which have hindered some of its business growth. Additionally, the conversion of OpenAI into a public benefit corporation, with Microsoft taking a 27% stake, is seen as a major driver. This plays directly into the broader artificial intelligence trade, meaning significant Wall Street capital is likely to flow toward the company.
Technical Analysis
From a technical analysis perspective, the $560 level stands out as major resistance. A break above that could kick off the next leg higher. On the downside, there are a couple of gaps that could send the market down toward $520, but there appears to be ample support between current levels and that area. Beneath that, the $500 level serves as additional support.
Ultimately, I believe Microsoft remains very bullish, though a slight pullback to find value might be in the cards, a “buy on the dip” type of setup.
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